Bioventus Inc. (Nasdaq: BIOV) plans to raise $182,647,044 through its IPO on July 29, 2016.

We previewed the deal on our IPO Insights platform last week.

The company is offering 8,823,529 shares with an overallotment option for an additional 1,323,529 shares of its class A common stock. Bioventus has set a price range of $16 to $18. The company is a biological technology firm that develops orthobiologic products for the treatment of a range of musculoskeletal conditions.

The underwriters for the IPO include J.P. Morgan, Piper Jaffray, Stifel and Leerink Partners.

Business summary

Headquartered in North Carolina, Bioventus is a biotechnology firm that was founded in 2012 by Smith & Nephew's biologic division, in partnership with Essex Woodlands. Bioventus has ~660 employees around the world and states that it generates annual revenues averaging $250 million.

According to its filings, the company generated revenues of $253.7 million in 2015 with a net loss of 38.1 million and operating expenses of $163.2 million. For the 3-month period that ended on April 2, 2016, the company reported net sales of $65.4 million. Bioventus has four operating segments: BMP, surgical, active healing therapies - international, and active healing therapies - U.S.

Since its founding, the company has grown its net sales by a compound annual growth rate, or CAGR, averaging 4.5 percent. In 2013, the company reported net sales of $232.4 million, in 2014, it reported net sales of $242.9 million and in 2015, it reported net sales of 253.7 million. Bioventus reports that its adjusted EBITDA has grown by a CAGR of 14.5 percent since 2013.

Executive management overview

CEO Anthony Bihl III has more than 30 years of executive experience in the medical diagnostics and devices industries. He joined Bioventus in Dec. 2013 as its new CEO. Before that, Bihl served as the president and CEO of American Medical Systems, leading its restructuring through to its eventual sale to Endo Pharmaceuticals. Prior to that, Bihl served as the CEO for Siemens Medical Solutions Diagnostics. During his tenure there, he consistently exceeded profit targets for the company. He serves on the board of directors for several biotechnology companies. Bihl graduated with his Bachelor of Science with distinction from Pennsylvania State University.

Senior vice president and CFO David Price has significant experience working as a CFO in both the healthcare and finance industries. Price joined Bioventus in 2012. Before that, Price served as the COO, CFO and corporate treasurer for Edgar Online, Inc., where he led a team comprising more than 300 people. A member of the Institute of Chartered Accountants in England and Wales, Price completed an honors degree in financial management and accounting at the University of Lancaster in the United Kingdom.

Financial highlights and risks

Bioventus reports that its orthobiologics are used to tap into the natural healing abilities of the body for recovery from musculoskeletal conditions. It anticipates that the potential U.S. market for its products is currently $3 billion and will grow by 4 to 5 percent annually. The company indicates it is the only company with net annual sales in excess of $100 million that focuses on orthobiologic products. Analysts predict that sales of its orthopedic products could grow by as much as 7 percent through 2020 because of demand from the aging U.S. baby boomer population.

Among its risks, Bioventus says that it is very dependent on a small number of products. It also indicates that its next generation of BMP products may not receive regulatory approval and have suffered net losses since the company's founding. The company also identified multiple weaknesses in its financial accounting practices through an audit of the years 2013, 2014 and 2015.

Conclusion: Hold Off

Bioventus appears as if it could have a promising future. It has steadily increased its net revenues, and the potential U.S. market is likely to grow substantially over the next few years. At the same time, weaknesses in its financial reporting practices, combined with net losses, gives us reason for concern. We recommend that investors hold off on purchasing shares for now.